McCain Interview with Peter Cook

SENATOR JOHN MCCAIN (R-AZ): Thanks, Peter. It's good to be back with you.

MR. COOK: I want to ask you just from the start here, five months ago until Election Day, as we sit here right now, do you feel like you're the underdog or are you the likely victor here?

SEN. MCCAIN: Actually, I think we're doing rather well and we do have a challenge. I would have to say I think I am in some respects the underdog, but one of the problems is, you know, the generic ballot between Democrat and Republican. But overall, I think we're doing very well and getting the message out. And there are stark differences between Senator Obama and myself, and so I'm happy with where we are but I recognize it's going to be a very tough, hard-fought, and I think very close campaign.

MR. COOK: Let's talk about the role the economy is going to play in this campaign. As we sit here today, given the problems, the challenges Americans are facing with the economy, do you think the economy has become more a decisive issue to voters than, say, national security will be?

SEN. MCCAIN: I think it's become the transcendent issue. We don't know how badly Americans are hurting and they are hurting very badly. The issue of national security is an underlying one and will always be there. And we don't know what is going to happen in the world. And because we're succeeding in Iraq with a strategy that Senator Obama adamantly opposed and still doesn't recognize, fails and refuses to recognize the success of, it's kind of moved off the front pages. I can't tell you how happy I am. But we've still got the Iranian threat. We've got our dependency on foreign oil. There is so many things that are affecting America's economy that also have to do with America's security.

MR. COOK: Let me ask you about one of those things.

SEN. MCCAIN: Sure.

MR. COOK: It's energy prices right now. We have seen oil prices roughly double in the last year or so. Since you and I spoke just a few weeks ago, prices up the pump up about 55 cents. Can you explain how that has happened? Is it simply supply and demand? Do you think something else is at work?

SEN. MCCAIN: I think, Peter, from talking from a lot of people that knows - know what goes on inside that there is a certain speculator effect here. And how big that is is a little hard for me to judge, but there should be a thorough and complete investigation of it. But the main problem is that there is a finite supply in the world and it's controlled by a few - by cartels, and therefore as growing demand on that finite supply, we are not keeping up in oil exploitation that is keeping up with demand, but we have a very, very serious problem on our hands.

MR. COOK: Are those countries doing enough to help the United States right now? Saudi Arabia, for example?

SEN. MCCAIN: Of course not. But the lesson here is, is not so much to beat up on them; the lesson is, is to get independence of foreign oil and also eliminate our green or drastically reduce our greenhouse gas emissions, also understand that it's a national security issue because some of the money we're sending overseas ends up in the hands of terrorist organizations. So we have to innovative wind, tide, solar - nuclear is a very big aspect of any reduction and dependence on foreign oil. We have to find places to store spent nuclear fuel.

MR. COOK: Let me ask you about that, I was going to ask you about this topic anyway. Last week the Bush administration announced it's going to proceed with its filing, federal filing to open the Yucca Mountain repository in Nevada, to store the spent nuclear fuel from around the country inside Yucca Mountain. What are you saying to the people of Nevada about what would happen to that project under a McCain administration?

SEN. MCCAIN: I have gone there and told them that I favor Yucca Mountain because we have to have a place to store the spent nuclear fuel. But we also have to reprocess. There is not enough storage space there. The first thing that goes in is defense-related materials that have to be stored. What about all of the spent nuclear fuel that is sitting around in ponds next to nuclear power plants all over America? That is a national security threat. But we not only have to store but we have to reprocess. The Europeans do.

MR. COOK: The proliferation issue is there. You know, there are a lot of people worried about what that might mean.

SEN. MCCAIN: Somehow the Europeans are able to handle it. By the way, there is also a Russian proposal that we could have a central place for reprocessing of spent nuclear fuel, and we could keep up that supply. There is lots of ways to do this. It's a NIMBY problem. It takes about five years to build a nuclear plant - power plant in Europe. It takes 10 years in the United States, by the latest estimates. And we don't know because it's been so long since we've built one. And I believe you're not going to address climate change seriously unless nuclear power is a big part of the equation. But the most urgent issue now is get independent and have our own sources of energy so that we can eliminate that and eliminate this terrible burden on American families that has taken place today.

And by the way, one small thing - why not give them a little holiday from the gas tax? Why not give the guy I encountered that owns three trucks that's paying 24.5 cents a gallon tax on every gallon of diesel fuel that told me that he's about to go broke? Why not give him a little break? I mean, instead of building a bridge in Alaska to an island with 50 people on it, why don't we give him a little break? I still think it was a good idea. Senator Obama called it a gimmick.

MR. COOK: Yeah, let me ask you about tax policy. You disagree with Barack Obama on a range of issues, but taxes sort of front and center right now. I want to get back to your vote back in 2000 against the Bush tax cuts. You said at the time that they weren't linked enough to spending restraints, also that you worried that maybe they were tilted too much towards the wealthy. Have you changed your view on that part of the Bush tax cuts? Do you think they have unnecessarily tilted towards the wealthiest Americans?

SEN. MCCAIN: Oh, I had a significant and substantial tax-cut package of my own. But right along with it was spending restraint. Look, our problem is not with revenues. Our problem is with spending. The size of the federal government has grown astronomically. Discretionary - that's a great word, you know discretionary - spending has grown, my understanding, like 40 percent, something astronomical. We have let spending get completely out of control.

And I predicted at the time that unless we had spending restraints, as we did in 1981 and 1982 when the Reagan tax cuts took effect, that we were going to pay a very heavy price. If we had restrained spending, given the growth of revenues that have resulted from these tax cuts, we'd be celebrating now and talking about more tax cuts. And could I just say, capital gains affects 100 million Americans. Senator Obama wants to raise that tax.

The Social Security tax cap, he wants to raise from 105,000 (dollars) to I think 200,000 (dollars). Do you know how many employers, small-business people that would mean a 12-percent increase in their Social Security tax? I mean, this is just - Senator Obama wants to raise taxes. I want to keep tax cuts in place. And I think that it's important that in a time of real crisis, economic crisis in America, the last thing we want to do is raise people's taxes now.

MR. COOK: Is income inequality a problem in America right now?

SEN. MCCAIN: I believe that income inequality is a problem in America because of the rising costs of health care, and now because we distorted the market, among other things, by having subsidies for ethanol, which I opposed, that Americans are paying a very heavy price. And what we need to do though is not penalize the rich in America. We've been through that drill. What we need to do is help the lower-income people by giving them a simpler, flatter tax code, by getting the price of oil under control - gasoline under control by eliminating dependence on foreign oil, by lowering their taxes, by giving every family in America a doubling from 3,500 to $7,000 dividend for a child in their family. All of those things - a tax break for their family.

MR. COOK: You know, Barack Obama says you can't - you talk about all these tax cuts. But you haven't come up with ways to pay for it. Pork-barrel spending, cutting that out is not enough to foot the bill under John McCain's proposals.

SEN. MCCAIN: First of all, let's stop the pork-barrel spending. Senator Obama has sponsored and been engaged in tens of millions of dollars of pork-barrel spending. If we don't stop that, the American people will never give us credit. I've never asked for a pork-barrel project for my state of Arizona. We can grow the revenue.

But most importantly, we can restrain spending in a broad variety of ways. And with restrained spending and keeping taxes low, we can grow revenues and we can grow this economy. And I can pay for the tax cuts that I envision. And I know that I can, whether it be the phasing out the alternate-minimum tax, which can affect I don't know how many million American families, or whether it is free trade.

And let me just say one word about free trade. One of the most important aspects of our future, and one of the things that's a little bit of a bright spot in our economy now is our exports. Senator Obama wants to unilaterally renegotiate the North American Free-Trade Agreement, a source of incredible wealth for all three countries. And unilaterally renegotiate. And of course, that would have repercussions all over the world. He opposes the Colombia free-trade agreement.

MR. COOK: A lot of Americans support, right now, what Senator Obama's position is on free trade. They think it's doing more harm than good to the U.S. economy. Are you prepared to lose votes and stick to your support for free trade?

SEN. MCCAIN: I've always been prepared to lose votes for what I know is right. And the fact is that I believe in the American worker. I believe the most productive, innovative worker in the world is the American worker, including the agricultural side. And I will open those markets to our goods and services. I'd love to try to negotiate a EU-American free-trade agreement.

But I'd also - what our problem is today is the displaced worker. We've got to have programs for displaced workers that will train and educate and meet the demands of the new jobs, which will be created with green technologies and innovation and the information technology revolution. Present system was designed for the '50s. We've got to go to the community colleges, have them design and implement education and training programs that will work. We can't leave these people behind.

But then, to practice protectionism - look, I've seen the pictures of Mr. Smoot and Mr. Hawley. They sent America from a recession into a deep depression. That is a terrible thought that we would raise the specter of protectionism and cut off our access to markets around the world. That's exactly what Senator Obama wants to do.

MR. COOK: Given your national security experience, are you going to give greater weight, as you consider vice presidential candidates, choices, to someone who has got economic and business experience.

SEN. MCCAIN: The important thing for me in a vice-presidential candidate is someone who shares my principles, my values, and my priorities. As you know, one of the hardest things for any newly elected president is to set priorities. And so that's really primarily and almost solely the criteria that I would use for the selection of a running mate.

MR. COOK: All right, let me just ask you finally - you've challenged Barack Obama to these town halls around the country leading up to the conventions in August and September. He hasn't responded directly back to you. At the end of the day, do you think these things are going to happen? And what will the American people learn as a result from these events?

SEN. MCCAIN: I know that the American people are sick of the spin, the spin rooms, the gotchas, the sound bites, the 527s. One of the oldest forms of democracy is a town hall meeting. And it provides citizens an opportunity to question the candidates in an informal and ad-hoc basis. No prepared speeches, no teleprompters, just responding to the American people. I would be glad to fly anywhere with Senator Obama. This is not an original idea with me. Senator Barry Goldwater and President Clinton had - excuse me - and President Kennedy - Senator Barry Goldwater and President Kennedy had agreed to fly, get on the same plane, and fly around the country. Unfortunately, the tragedy of Dallas intervened.

So I'd love to do that. We could do one a week between now and the Democratic convention.

MR. COOK: Do you think he's going to do it?

SEN. MCCAIN: I don't know. I hope that he will understand that that's the most effective way we can hear - the American people can not only hear our views, but us to hear and listen to them. They think we're not listening in Washington. And you know what, they're right.

MR. COOK: Senator John McCain, thank you very much for your time. Appreciate you joining us here on Bloomberg. Look forward to talking with you again sometime down the road on the campaign trail. With that, Kathleen, we'll send it back to you in New York.